MCM currently produces 2.8 million tonnes per annum (mtpa). According to General Manager Edwin Elias, MCM finds itself in a position where they need to urgently ramp up production to take advantage of rising global demand, especially in Europe and Asian markets. The war in Ukraine has forced European nations to move away from Russian coal, gas and oil, raising the price of fossil fuels.
Russia, the third-largest exporter of coal, has been hit with broad sanctions by the West over its war in Ukraine, leading to shortages of coal and other commodities at a time when demand had already been rising due to recovery of the global economy from the initial COVID-19 impact. As a result, coal prices have grown by more than 300 percent over the past two years.
According Elias, countries in the European Union (EU) as well as in Asia are on the hunt for coal as baseload power and are increasingly looking to South Africa and Botswana, among other producers. Elias says Botswana, more especially MCM, boasts the best coal grades globally, and as a result, demand for MCM coal is on the rise. Given that MCM has the best coal grade in the world, and also has a very large coal resource of about 4.2 giga billion tonnes (gbt), the time is now for the mine to ramp up production and cash in on the rising demand and skyrocketing coal prices.
MCM SIGNS TWO INTERNATIONAL EXPORT CONTRACTS
MCM recently signed two contracts to ship P54 million metric tonnes worth of coal to Asia and P190 million tonnes to Europe per annum. Further, MCM last month exported 4,000 tonnes of coal through Maputo port in Mozambique, sending two consecutive trains hauling 40 wagons through Zimbabwe.
“We expect to ship 162,000 tonnes per annum through the same route,” Elias said at a recent mine tour, adding that they have received a lot of enquiries and are currently in talks with Poland which needs between 1 million to 2 million tonnes worth of coal per annum. Further, they are in talks with some Asian countries about exporting the same amount of coal to them.
Morupule, which is Botswana’s oldest colliery, currently produces 2.8 million tonnes of coal per year, but through an expansion known as Motheo that is due to launch by mid-year, this will add another 4.2 million tonnes in the years to come. Officials say looking at the current demand, even this additional capacity may not be enough. “Looking at the current demand, we might have to build another (coal wash) plant sooner than planned so as to ramp up production and meet demand,” Elias said.
According to Elvidge Raditlhongwa, MCM’s Production Manager, in a quest to increase production and take advantage of current global coal demand and to explore the economic potential of their rich coal resource, the mine has decided to open another plant, this time an opencast operation. Given that MCM has no experience in running an opencast operation (they run an underground operation now), the mine recently awarded a five-year mining services contract to a joint venture between Bothakga Burrow, a local citizen-owned company, and Basil Read Mining, a South African based company.
The contractor is currently focused on development of an opencast coal mining operation at the MCM Motheo project, an expansion project established by MCM to develop an opencast mine, a coal washing plant and associated infrastructure. The ultimate aim of the project is to facilitate MCM’s contribution to Botswana’s economic growth and transformation of coal into an unlimited source of energy.
Motheo’s aim is to increase production capacity from 2.8 mtpa to 4.2 mtpa, increase MCM market share regionally, and to allow MCM to enter new markets like the European Union (EU) and Asia. Further, through Motheo, MCM wants to reduce dependency on revenues from Botswana Power Corporation (BPC), which is currently its single largest client, as well as to improve resource utilisation and realise potential asset value.
MCM was motivated by coal supply shortages in regional and international markets to expand to the Motheo Coal Project. Regionally, there is increased coal demand for thermal coal powered electricity production. Radithongwa said the shortage is caused by limited investments in new coal mines and continued demand for energy by Asian economies. Further, Motheo Coal Project expansion is geared at addressing the coal supply gap and take advantage of current premium coal prices.
Commissioning of Phase 1 of Motheo Plant is to commence at the end of May 2022 (ROM Plant & Overland Conveyors) while commissioning of Phase 2 of the plant is forecast for August 2022 (Wash Plant & Product Handling). Motheo Opencast Coal Mine has a contracted capacity of 1.4 mtpa while the Coal Processing Plant has a contracted capacity of 1.1 mtpa. The ground-breaking event for development the project took place in November 2021, officiated by President Mokgweetsi Masisi.
The first blast was conducted in February 2022 and about 14 blasts have been conducted to-date. According to Radithongwa, weathered coal has already been intercepted and the first coal is forecast to be intercepted in May 2022. In 2021, MCM revenue exceeded P700 million, 17 percent higher than anticipated. Also in 2021, total coal sales stood at 2 037 140, which was just 0.1 percent lower than initially projected. In 2022, total coal sales for the year to-date is 781573 tonnes.